John Teske, Julie A. Teske, Katherine Teske an Elle Teske, Plaintiffs-Appellants,
Wilson Mutual Insurance Company, Defendant-Respondent-Petitioner. United HealthCare Insurance Company, Subrogated Party-Plaintiff,
Argument: March 18, 2019
Circuit Court Fond du Lac County (L.C. No. 2016CV500) Peter
L. Grimm Judge.
the defendant-respondent-petitioner, there were briefs filed
by Corrado Cirillo and Olsen, Kloetr Gunderson & Conway,
Sheboygan. There was an oral argument by Corrado Cirillo.
the plaintiffs-appellants, there was a brief filed by Keith
E. Trower and Warshafsky, Rotter, Tarnoff & Bloch, S.C.,
Milwaukee. There was an oral argument by Keith E. Trower.
ANN WALSH BRADLEY, J.
petitioner, Wilson Mutual Insurance Company (Wilson), seeks
review of an unpublished decision of the court of appeals
reversing the circuit court's order that determined the
Teskes' claims were barred by the doctrine of claim
preclusion. Wilson contends that the circuit court
correctly dismissed the Teskes' claims because the claims
could have been brought in a prior action between the same
Specifically, Wilson asserts that claim preclusion applies to
bar all of the plaintiffs' claims because all three
elements of claim preclusion are established. It contends
that the parties to the first and second actions were the
same, or were in privity. Wilson argues next that identity of
causes of action is present because the claims in this
lawsuit and the previous lawsuit arose from the same common
nucleus of operative facts. Finally, it advances that there
was a final judgment on the merits in the first action.
We conclude that claim preclusion bars the claims brought by
Julie, Katherine, and Elle Teske in this second action.
Accordingly, we reverse that part of the decision of the
court of appeals that allowed their claims to proceed.
However, we are evenly divided as to whether claim preclusion
bars the claims brought by John Teske. As a result, we affirm
the court of appeals' decision that allowed John's
claims to proceed.
This case arises from a car accident in Fond du Lac County on
November 24, 2013. The underlying facts of the accident are
Emily Teske was driving a vehicle in which her mother, Julie,
and two sisters, Katherine and Elle, were passengers. John
Teske, Julie's husband and Emily, Katherine and
Elle's father, was not in the car. Julie, Emily,
Katherine, and Elle were all seriously injured after their
vehicle was rear-ended by a car driven by Sabrina Srock. The
force of the collision propelled the Teskes' car into the
oncoming lane, where it struck a vehicle driven by Patrice
Rog, who was also injured.
Srock carried an automobile insurance policy with State Farm
that provided a policy limit of $100, 000 per person and
$300, 000 per accident. The Teskes carried a policy with
Wilson, which as relevant here contained underinsured
motorist (UIM) coverage with a policy limit of $500, 000 per
person, per accident. Importantly, the Wilson policy also
incorporated a "reducing clause" which
"permits a setoff from the insured's UIM coverage
[in] the amount paid to the insured by the underinsured
The accident resulted in two separate lawsuits. In the first
action, Julie Teske brought a negligence claim against Srock
and her insurer, State Farm, in Milwaukee County circuit
court. Katherine and Elle were also named as
plaintiffs, although as minors they were represented by a
guardian ad litem.
Pursuant to a minor settlement agreement,  the parties
settled the lawsuit and agreed how the money from the various
insurers would be split. State Farm tendered its $300, 000
policy limit, but the amount was insufficient to cover the
full medical expenses incurred by Rog and the Teskes. The
amount was ultimately split between the Teskes and Rog, with
the Teskes receiving $255, 000 and Rog receiving $45, 000.
Applying the policy's reducing clause, Wilson agreed to
pay the Teskes $245, 000. It arrived at this amount by
beginning with its $500, 000 UIM policy limit and subtracting
the $255, 000 the Teskes received from State Farm.
Each member of the Teske family received proceeds from the
insurance settlement as set forth in the minor settlement
agreement. Specifically, Julie received $264, 000, Katherine
received $40, 000, Elle and Emily received $35, 000 each, and
John received $20, 000.
Also incorporated into the minor settlement agreement was a
"Pierringer Release." Pursuant to the
Pierringer Release, the Teskes released all of their
claims against Srock and State Farm. The Teskes partially
released Wilson to the extent of the $245, 000 it paid.
However, they explicitly "reserved the right to pursue
further claims for UIM benefits against [Wilson] and [Wilson]
has not waived any defenses to such future claims." The
minor settlement agreement was signed by each member of the
Teske family,  as well as a representative of Wilson, and
approved by the circuit court.
After releasing Srock and State Farm, Julie, Katherine, and
Elle amended their complaint and added Wilson as a defendant.
At issue in this amended declaratory action was whether the
reducing clause in the Wilson policy was properly applied.
Venue was transferred to Sheboygan County, and the Sheboygan
County circuit court determined that the reducing clause was
unambiguous, valid, and applicable. Julie, Katherine, and
Elle appealed and the court of appeals affirmed. Teske ex
rel. Harding v. Wilson Mut. Ins. Co. (Teske I),
No. 2015AP208, unpublished slip op. (Wis. Ct. App. Aug. 19,
2015). The same three Teskes petitioned for review, which
this court denied, thus ending the first action.
Following the resolution of the first action, John, Julie,
Katherine, and Elle brought this second lawsuit. They alleged
that Emily, as the driver at the time of the accident, was
negligent in the operation of the Teske vehicle. However,
they sued Wilson directly as Emily's insurer pursuant to
Wisconsin's direct action statute.
Moving for summary judgment, Wilson argued that the
Teskes' negligence action was barred by the doctrine of
claim preclusion. Focusing on the first two elements of claim
preclusion, identity of parties and identity of causes of
action, it asserted that there was identity between the
parties in both lawsuits. It based this argument on the
observation that Wilson, Julie, Katherine and Elle were all
named plaintiffs in the first action. Wilson also observed
that although John was not formally named a party in the
first action, he participated and received proceeds from the
minor settlement agreement.
Wilson also contended that there was identity between the
causes of action in both lawsuits. Specifically, it argued
that the actions arose from a single event-the November 24,
The circuit court agreed with Wilson and granted the motion
for summary judgment. It determined that "there is no
dispute as to the technical identity between the parties
given the captions and pleadings of the suits and the
involvement of the parties in the ...